Weekly Roundup | 04.23.2024

Our pick of headlines this week impacting commercial real estate in the emerging markets.

Apr 23, 2024

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Headlines:

Banks Believe They Are Well-Prepared for Commercial Real Estate Fallout

Commercial Real Estate Foreclosures Jumped 117% in March as Trouble Looms

Perfect Landing Spot.” Apple Plans to Spend More in Vietnam as it Looks Beyond China

How Chinese Firms are Using Mexico as a Backdoor to the US

Residential in Latin America Showed “Remarkable Resilience and Growth” in 2023

Petro Asks Bogota’s Population to Leave the City Over the Weekend to Reduce Water Consumption

Volkswagen to Invest $210 Million in South African Plant

Rwanda Pledges “Africa Won’t Be Bullied Into Choosing Sides Between China and the USA”

Confronting the China Challenge in Africa: The Lobito Corridor

Philippines, US Launch Annual Joint Military Drills

Japan’s Takashimaya Eyes 2026 Opening for New Vietnam Shopping Center

Construction Paused at VinFast’s NC Site as Carmaker Seeks a Smaller Footprint

Philippines Wants US, Japan to Take Over Rail Deal Eyed by China

Global

📰 Banks Believe They Are Well-Prepared for Commercial Real Estate Fallout

The direction of rates doesn’t matter as much for some of the most troubled loans, such as those to office buildings that are mostly vacant, if they aren’t generating much if any cash flow. But the properties that have that problem are likely already well-known to their lenders. Investors should definitely stay vigilant about the state of commercial real estate. But that doesn’t mean banks have been blind to the risks.

📰 Commercial Real Estate Foreclosures Jumped 117% in March as Trouble Looms

There were 625 commercial real estate foreclosures in March, up 6% from February and 117% from the same time last year, according to a new report published by real estate data provider ATTOM. About $1.5 trillion in commercial mortgage debt is due by the end of 2025, but steeper borrowing costs, coupled with tighter credit conditions and a decline in property values brought on by remote work, have increased the risk of default.

📰 “Perfect Landing Spot.” Apple Plans to Spend More in Vietnam as it Looks Beyond China

Apple is planning to buy more components from Vietnam, underscoring a trend among global tech firms to look beyond China to secure their supply chains, cut costs and open up new markets. CEO Tim Cook made the pledge in a meeting with Vietnamese Prime Minister Pham Minh Chinh in Hanoi last Tuesday. Apple has already spent almost $16 billion through its supply chain in the country since 2019, and the company has created more than 200,000 jobs in Vietnam.

Latin America

📰 How Chinese Firms are Using Mexico as a Backdoor to the US

Mr. Dussel of the Centre for China-Mexico Studies thinks nearshoring is better defined by what he calls "security-shoring", saying Washington has placed national security concerns above all other factors in its relationship with China. Mexico, he argues, must be wary of being caught in the middle. Amid this tension, Mr Dussel says: "Mexico is putting up a big sign to China saying: 'Welcome to Mexico!'. You don't need a PhD to know that this isn't going to end well for bilateral relations between the US and Mexico in the medium term," he adds.

📰 Residential in Latin America Showed “Remarkable Resilience and Growth” in 2023

According to one of the top institutional investors in Latin America real estate, residential and multifamily in the region showed "remarkable resilience and growth" in 2023. The 2023 real estate trends report from the Los Angeles-based investor, Paladin Realty, is available in this article for download. The report provides a bullish assessment of the opportunity and covers the key markets of Brazil, Colombia, Mexico, Peru, and Chile. Emerging Real Estate Digest asked Paladin Realty's Latin America CIO questions about some of the conclusions, and those responses are included in the article exclusively for our subscribers.

📰 Petro Asks Bogota’s Population to Leave the City Over the Weekend to Reduce Water Consumption

Mexico City isn’t the only city in Latin America with a major water issue with local governments seemingly ill-equipped and uninterested in ameliorating. Over the X social media platform the former Marxist guerrilla, now President of Colombia, urged rationing of water and to take trips to reduce consumption.

Africa

📰 Volkswagen to Invest $210 Million in South African Plant

Volkswagen invests $210 million to build new SUVs in the Eastern Cape: Volkswagen plans to invest 4 billion rand ($210.67 million) in its South African plant in the Eastern Cape in preparation to manufacture a new SUV in 2027. South Africa is easily the largest automotive manufacturing hub on the African continent, hosting global brands such as Toyota, Isuzu, Volkswagen, and Mercedes.

📰 Rwanda Pledges “Africa Won’t Be Bullied Into Choosing Sides Between China and the USA”

Rwanda will not be “bullied” into taking sides in the superpower rivalry between the United States and China, a senior Rwandan diplomat said in an exclusive interview with the South China Morning Post, adding that Beijing has been “really helpful” to many African economies. James Kimonyo, Rwanda’s ambassador to China, said both Washington and Beijing were important partners for the African country, which has been rebuilding its economy in the three decades since the end of its genocide.

📰 Confronting the China Challenge in Africa: The Lobito Corridor

The Lobito Corridor project in Africa is a significant infrastructure initiative aimed at creating a vital trade route. It seeks to connect the mineral-rich Democratic Republic of the Congo ("DRC") and Zambia to Angola's Atlantic coast port city of Lobito. This project holds particular interest for some Western nations, potentially serving as a counterpoint to China's expansive Belt and Road Initiative ("BRI").

China remains a dominant economic force in Africa, having invested $1.8 billion in the first half of 2023 alone, marking a year-on-year increase of 4.4 percent. Chinese investments significantly contribute to infrastructure advancement in Africa, with China-funded and -led projects valued at over $400 billion having been concluded. China's bilateral trade with Africa reached $282 billion in 2022, solidifying its role as Africa's largest trade partner for the fourteenth consecutive year.

Southeast Asia

📰 Philippines, US Launch Annual Joint Military Drills

Thousands of Filipino and American troops kicked off joint military exercises in the Philippines on April 22, as Beijing’s growing assertiveness in the region raises (https://t.me/asianomics/2997) fears of a conflict. The annual drills – dubbed Balikatan, or “shoulder to shoulder” in Tagalog – will be concentrated in the northern and western parts of the archipelago nation, near the potential flashpoints of the South China Sea and Taiwan. The joint drills involve a simulation of an armed recapture of an island in Palawan province, the nearest major Philippine landmass to the hotly disputed Spratly Islands in the South China Sea.

📰 Japan’s Takashimaya Eyes 2026 Opening for New Vietnam Shopping Center

Japanese retailer Takashimaya is strengthening its foothold in Vietnam with a plan to launch a shopping centre in Hanoi by 2026. As reported by Nikkei Asia, Toshin Development, a subsidiary of Takashimaya, has started construction of a mixed-use complex that includes a department store, apartments, offices, and commercial spaces. Takashimaya is expected to invest an estimated 2 billion yen ($12.9 million) in opening the department store. The project will make it the first Japanese department store chain to establish a physical presence in Hanoi.

📰 Construction Paused at VinFast’s NC Site as Carmaker Seeks a Smaller Footprint

On Dec. 8, VinFast revised its assembly plant designs. Instead of a 995,000-square-foot structure, it now asked Chatham for one that only covered 782,250 square feet. Where the original assembly area design made a U-shape, the new layout is more rectangular, said David Camp, Chatham’s director of permits and inspections, as a truck loading dock featured in the middle of the original design was cut out.

📰 Philippines Wants US, Japan to Take Over Rail Deal Eyed by China

Similar to Africa’s Lobito Corridor, the Philippines’ Luzon Economic Corridor is an idea hatched by the US and Japan to invest in the economic zone to link former US military bases converted into commercial hubs with rail and other infrastructure. The Subic-Clark railway works were awarded to China, but due to lack of progress, the Philippines would like America and Japan to take over. If not them, South Korea has been mentioned as another alternative.

Afrika Vantage